STOCKHOLM, Sept 30 (Reuters) - Safe-haven Sweden is set to
see strong demand for its debt for some time to come thanks to
strong government finances and a gold-plated investment rating,
the head of debt management at Sweden's Debt Office said on
Monday.

Sweden saw foreign investors pile into its bonds in the wake
of the financial crisis and they remain net buyers despite
brighter signs in the global economy, Thomas Olofsson told the
Reuters Nordic Investment Summit.

"Sweden together with other countries in northern Europe are
seen as safe havens," he said.

Foreign investors owned 51.9 percent of outstanding Swedish
government bonds at the end of July, up from 35.7 percent at the
end of 2008, according to the Debt Office.

Olofsson said that much of the demand for Swedish debt was
coming from central banks diversifying their foreign currency
holdings, while Sweden's rare AAA-rating gives its debt wide
appeal.

"The panic is perhaps gone from the euro into other
currencies, but diversification, the need for AAAs, the need for
liquidity is still there," he said.

"I think there are at least good arguments for why this
could be a more structural trend, and once it is in place I
think it will take time to reverse it," Olofsson said.

Demand for Swedish debt will remain despite a worsening in
Swedish government finances, he said.

Sweden is expected to need to borrow a net 163 billion
crowns ($25.39 billion) this year, according to a Debt Office
forecast from July with a further shortfall next year.

But this has not spooked investors, Olofsson said. Despite
an election due next year and a government that is increasing
spending to stimulate the economy, he said investor confidence
remained high the government would be prudent in its plans.

GROWTH

Growth this year in Sweden is expected to be around a meagre
1 percent but to pick up next year.

With state debt at about 32 percent of gross domestic
product at the end of 2012 and expected to decline to as low as
25 percent in 2017 according to the Debt Office, its public
finances remain among the best in Europe.

"We don't have to be afraid to have deficits because
deficits don't trigger any sort of alarm," Olofsson said.

"Structurally, we do have a balanced budget or better, so it
is not a problem."

Nor have investors taken alarm at worries about levels of
household debt in Sweden that are among the highest in Europe,
he said.

A house price crash could trigger a deep economic recession
and lead to big losses for Sweden's lenders.

"Investors ask me about the banking system, but it doesn't
seem to be any kind of headline question for investors today,"
Olofsson said.

Sweden's government has introduced a number of measures to
ease pressure in the housing market, but has warned that it may
need to take further steps - including higher capital
requirements to cover bank's mortgage lending - if borrowing
rates do not slow.

The Debt Office is still looking at whether to issue a new
30-year bond, but Olofsson said demand for such debt remained
uncertain.

However, revised regulations for insurance companies in
Sweden were likely to lead to somewhat increased demand for debt
in the 10-20 year maturity range, he said.